Microsoft Skips Theaters With ‘Halo’ Film on YouTube

By Cliff Edwards -
Oct 4, 2012

Microsoft Corp. (MSFT)’s full-length,
Hollywood-style movie based on the next “Halo” video game will
skip the big screen, streaming instead on Google Inc. (GOOG)’s YouTube
before heading to store shelves as a DVD.

The Redmond, Washington-based maker of the Xbox console,
promoting the November release of “Halo 4,” has taken the
unusual step of creating its own 90-minute movie, at a cost of
almost $10 million.

Microsoft plans to release weekly installments of “Halo 4:
Forward Unto Dawn” on the Web before offering the game and DVD,
a move that highlights the influence of new media, including
promotional options and the ability to cut out traditional
channels like theaters. The film airs starting tomorrow in five
15-minute segments on the YouTube channel Machinima Prime,
leading up to the game’s debut on Nov. 6.

“We’re either the best-funded Web series of all time, a
sort of mid-road healthy TV pilot, or a super-low budget
movie,” director Stewart Hendler said in an interview.

The clips of “Forward Unto Dawn” will stay online through
Nov. 23, then disappear until Dec. 4, when a Blu-ray disc goes
on sale that includes an added 15 minutes, for a suggested
$28.99. The film will also be available for download from Apple
Inc. (AAPL)’s iTunes, Microsoft’s Zune Marketplace and other online
movie stores.

Microsoft almost didn’t make a “Halo” movie. In 2006, the
company shelved plans for a live-action theatrical release with
Universal Pictures and Twentieth Century Fox over financial
concerns, Variety reported at the time. The trade publication
put the budget at $135 million.

Seasoned Director

After the stumbles in Hollywood, Microsoft began financing
and distributing short videos and animated films online, while
selling rights to make novels and comic books based on “Halo.”
For “Forward Unto Dawn,” the company hired Hendler, whose
directing credits include the horror movies “Sorority Row” and
“Whisper,” and developed a script based on one of the novels
and tied to the pending game.

While the production team hired the actors, Microsoft
retained final say, including the decision not to use Steve
Downes, according to Matt McCloskey, a Microsoft business
director who manages Halo’s development. Downes’ distinctive
voice as Master Chief in the games is known to legions of
“Halo” fans.

New Window?

By self-producing a movie and then releasing it both online
and through traditional home-video outlets, Microsoft has carved
a new distribution path, Laura Martin, a media analyst at
Needham & Co., said in an interview. YouTube and other streaming
sites traditionally show short-form video.

“They’re basically replicating the traditional film-window
strategy of movie to home video, but they’re releasing it on the
Web,” Martin said. “With this experiment, they’ve now given us
another window into, ‘What does the premium online content
market look like?’”

At least two movies, “Girl Walks Into a Bar” and “The
Princess of Nebraska,” made their debuts online before moving
to home video, according to Chris Dale, a spokesman for Mountain
view, California-based Google. Consumers who buy a limited
edition of the game will receive a free download of the movie on
their Xbox, McCloskey said, a tie-in that highlights the
marketing possibilities for other videos tied to games.

Produced over five weeks last spring in Vancouver, the
movie tells the story of an alien invasion that occurs 25 years
before the original “Halo” video game, with a new hero called
Thomas Lasky and appearances by Master Chief, the protagonist in
previous games. Actor Daniel Cudmore, who played Colossus in two
“X-Men” movies, dons the armored suit of Master Chief.

Top Franchise

“The Web world is making everybody that works within it
think outside the normal pattern of film development,” Hendler
said.

Microsoft, which released the first “Halo” title in
November 2001, rose 0.6 percent to $30.03 at the close in New
York. The shares have gained 16 percent this year.

“Halo,” exclusive to the Xbox, ranks among the 10
largest-grossing video-game franchises of all time, selling tens
of millions of copies, according to Michael Pachter, an analyst
at Wedbush Securities. The franchise has generated more than $3
billion in revenue, according to Microsoft.

Microsoft has a lot at stake with the next installment,
said Pachter, who is based in Los Angeles. “Halo 4” is the
first title in the franchise to be developed by 343 Industries,
the Microsoft-owned studio that was tapped in 2007 to oversee
the property after its creator, Bungie Studios, became
independent and signed a 10-year publishing deal with Activision
Blizzard Inc. (ATVI)

“You see something that looks like a video game, you’re
going to get the same crowd you always get,” McCloskey said.
The movie is “not simply a marketing vehicle, though. It is in
and of itself a standalone property.”